According to the latest Wall Street Journal article, home prices are rising due to the shrinking supply of homes. I guess for some this isn’t surprising, as the supply declines prices rise. But what is notable is this jump in home prices is the largest we’ve seen in seven years. Homes prices jumped 6.0% from the first quarter to the second quarter of 2012, the biggest quarterly increase in prices since 2005.
The main force behind the home-price gains appears to be a shortage of homes for sale. The number of properties on the market is down sharply from a year ago. Meanwhile, demand is up, as mortgage rates have dropped to their lowest levels in at least 60 years.
The Albany real estate market has experienced a similar trend, as compared to the national real estate market. The monthly absorption rate of homes – the rate at which it would take to sell the current supply of homes on the market – has dropped significantly since 2011. Given the current supply of homes for sale in Albany county, it would take less than 10 months to absorb the current inventory of homes for sale. Generally a 6 month absorption rate is defined as a buyer’s market. Absorption rates over 6 months tilt towards a home buyer’s market, absorption rates below 6 months lean towards a home seller’s market.
There is no question the housing market and our national economy are anxious to leave the great recession behind. Just today the Dow Jones Industrial average finished above 13,000, less than 1,000 points shy of the all time high. Unfortunately we know all too well the divide that persists between Wall Street, and our local streets. Evaluating the health of the Albany housing market, or the Delmar housing market, or Saratoga housing market, isn’t as easy as looking to the DJIA.
Others economic indicators, such as the monthly jobs reports have shown some mixed results. Unfortunately every two steps forward in our economy have been met with one and sometimes two steps back. The July employment numbers smashed analysts expectations when the American economy created over 163,000 jobs, but at the same time unemployment ticked up 0.1% to 8.3%.
Monticello will continue to monitor the regional housing market, along with the national and international economic trends so you don’t have to. We pride ourselves on being as versed in the neighborhood nuances as we are in the national headlines. Buying or selling in Albany or Saratoga, isn’t as simple as just reading the local paper. But we promise to simplify the home buying and selling experience for you. Feel free to contact us today.
And don’t forget, if you buy your next home with Monticello in 2012, we’ll give you up to $1,000 Cash Back just for the privilege of earning your business.
